Among my American friends, I’ve not met a single person who hasn’t had some kind of reaction after watching this. Of the recent spate of anti-Chinese ads that’s been done (such as here and here), this one stands out as it points towards an uncomfortable truth: as the U.S. government continues to spend its way out of recession, it continues to increase its debt to China. Surely, in the long-run, this can’t be good.
If you listen carefully to this analysis, however, you’ll also hear an underlying narrative. Like the story portrayed by the Chinese professor, it’s the narrative of empires, where every empire has its moment of glory on the world stage before it collapses and is replaced by another. Today, it’s the story of a re-emergent China growing at America’s expense, capturing its once-formidable industries through lax labor and environmental standards, manipulating its currency to enjoy a superior terms of trade, and financing the U.S. fiscal deficit which many Americans now believe to be misspent.
Granted, it’s a compelling narrative, but also an example of political spin where certain facts are exaggerated and others over-simplified. In essence, the advertisement is a right-wing attack on Obama’s fiscal stimulus laced with xenophobia to make the pill easier to swallow.
To begin with, the narrative of America’s absolute decline is misleading. As Joseph Nye points out in Foreign Affairs this month, people have been prophesying America’s doom since its conception, though America’s pre-eminence still remains a fact:
…Americans are prone to cycles of belief in their own decline. The Founding Fathers worried about comparisons to the Roman republic… In the last half-century, belief in American decline rose after the Soviet Union launched Sputnik in 1957, after President Nixon’s economic adjustments and the oil shocks in the 1970s, and after the closing of the rust-belt industries and the budget deficits in the Reagan era. Ten years later, Americans believed that the United States was the sole superpower, and now polls show that many believe in decline again.
So, while it’s fashionable to lament about America’s woes in the backdrop of an re-emergent China, let’s get some historical perspective here. Proclamations about America’s decline tend to be cyclical; and even if it does a prospect like this does materialize in 2030, my bet is that the professor will still be lecturing at a place like Harvard, not Beijing.
Then, there’s the flimsy economics. While it’s true that the U.S. debt size has ballooned to historic levels, of which China is a significant stakeholder, given that most financial assets are still US dollar-denominated today, that doesn’t mean anything significant for now. The analogy of China being the “owner” and U.S. the hapless debtor is incorrect, because the two economies are structurally interdependent. China derives much of its growth from a healthy export market in the U.S., so a strong U.S. will always be in its interests. Unlike commercial finance where debt implies ownership of one’s means, the same cannot be said in international finance, though it does point to imbalances in the system.
In the end, this is a textbook example of scapegoating. Instead of criticizing Obama’s stimulus in a meaningful fashion, China is brought in to stimulate fear and xenophobia – rather than relevant public debate – to muster popular support. But as Michael Bloomberg, mayor of New York, told the Wall Street Journal: “I think in America, we’ve got to stop blaming China and blaming everybody else and take a look at ourselves.” If progress is to be made, America’s politicians must stop playing blame games, and work towards solving real problems.
Photo Credit: Wikimedia Commons